Financial News

Republic Fashions Rent Switch Amid Downturn

The youth fashion chain Republic is eyeing a switch to monthly rental payments in an attempt to avert a cashflow crunch amid the broader trading crisis that has already claimed three prominent retail casualties this year.

I understand that Republic, which is chaired by the former Asda boss Andy Bond, is in talks with landlords about changing the rental terms at its roughly-120 shops.

If a transition to monthly payments does take place, it would bring Republic into line with scores of other prominent high street chains which are trying to manage their cost-bases more efficiently.

Republic, which targets a young adult customer base with brands including Diesel, Firetrap and G-Star, has been afflicted by tough trading in recent months, as a consequence of which it has slowed its store-opening programme.

While it has scaled back its ambitions of doubling the size of the chain to more than 200 outlets, it did open a new flagship store in Leeds, where the company was established, last year.

TPG, the US-based buyout giant which owns Republic, has injected new capital into the company on at least two occasions since it bought it two-and-a-half years ago. Approximately £20m is understood to have been put in during 2012.

The company is understood not to be in any danger, with TPG, which paid £300m for Republic in June 2010, a fully-committed owner, insiders have suggested.

Last year, Republic appointed Paul Sweetenham, the former chief executive of TK Maxx, as its new chief executive. His focus on developing the company's digital sales channels is thought to be paying off with a sharp rise in sales from Republic's online operation.

The company's difficult overall trading performance reflects the travails of many retailers, with HMV, Jessops and the DVD rental chain Blockbuster all falling victim to the anachronism of their business models in the last week.